Federal Budget · 12 May 2026

Budget deficit of $31.5 billion funds tax cuts, childcare expansion and hospital spending

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Keep an eye on it

The 2026–27 budget shapes spending, tax and entitlements for millions of Australians across health, family payments, housing and defence.

In a nutshell: Treasurer Jim Chalmers handed down the 2026–27 budget on 12 May with a $31.5bn deficit. Key measures: income tax cut (16% to 15% bracket, now in effect); $150 energy rebate for households and small businesses; three days of subsidised childcare; $26.8bn for public hospitals; $5.9bn for new PBS medicines; $2bn for housing infrastructure. Defence spending rises $53bn over a decade.

Spin Unspin

What they’re saying

Government framed it as reform-led; critics noted the deficit is substantial given elevated inflation and questioned whether more spending worsens the RBA’s task.

Some economists argue higher spending offsets fiscal drag in practice; the RBA’s own minutes did not cite the budget as a factor restraining future hikes.

Budget figures sourced from Wikipedia’s 2026 Australian Federal Budget article and budget.gov.au; both corroborate the deficit and key line items.

2026 Australian federal budget

Cost of living | Budget 2026–27

Do I care?

Three days of subsidised childcare is now policy — contact your childcare provider or Services Australia to confirm entitlement and activity test requirements.

New PBS listings include treatments for cystic fibrosis, cancers and chronic kidney disease — ask your specialist whether a newly listed option applies.

If you have children in childcare or take new medicines, check whether expanded subsidies or new PBS listings apply to you.

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